The proposed £250 million sale of a major player in the clean-up of the Sellafield site in West Cumbria is “on track” despite an on-going probe by the competition watchdog.

In a trading update, engineering giant Wood Group said the disposal of its nuclear business to Jacobs should be completed in the first quarter of 2020 as part of its “portfolio rationalisation strategy”.

As reported by in-Cumbria earlier this month, the Competition and Markets Authority (CMA) has launched an investigation Jacobs’ acquisition of Wood Nuclear Limited.

The CMA said it was considering whether the acquisition – announced in August last year – would result in a “substantial lessening of competition” in the marketplace as stipulated in the Enterprise Act 2002.

The two businesses had pre-empted the move by the CMA by agreeing that Jacobs will pay Wood a fee of £7.5m should the watchdog does not clear the transaction.

But in the trading update issued to the London Stock Exchange, Wood said it expected the deal to go through in the next few months.

“We continue to make good progress on our portfolio rationalisation strategy as we focus on premium, differentiated, higher margin activities,” it said.

“The agreed sale of our nuclear business for c$325m is on track to complete in Q1 2020 and will accelerate progress to our target leverage. We are also active on other sales processes.”

The proposed deal would see Wood Nuclear Limited along with “subsidiary and certain affiliated companies” and their contracts come under control of Jacobs’ UK division.

Contracts currently held by Wood Nuclear Limited include the management of the Design and Engineering lot for the Programme and Project Partners (PPP) framework – a 20-year contract awarded last year by Sellafield Limited as part of its push to “revolutionise” the decommissioning of the site.

The PPP contract could be worth up to £769m to Wood Nuclear Limited, a long-standing big tier company at Sellafield, which was also awarded a £50m contract in December to provide programmable digital control technologies to the plant.

The group employs 1,300 people in the North West, including staff at bases in Sellafield and Whitehaven.

The CMA has invited “interested parties” to comment on the acquisition before the deadline of January 22 as part of its Phase 1 investigation, which has a statutory deadline of March 4.

The Phase 1 period typically includes an invitation to both parties to address any concerns raised during the invitation to comment period.

Should the CMA’s concerns not be addressed, the case would move to Phase 2, which involves a group of independent CMA panel members carrying out an in-depth investigation.

Wood said it “fully expecting” the CMA investigation and was awaiting its outcome.

In its trading update, Wood said earnings before interest, tax, depreciation and amortisation was up from £653m to just under £661m and operating profit before exceptionals was also up from £315m to around £322m – both in line with current market expectations.

Revenues of around £7.7bn were in line with 2018, “reflecting generally robust activity”, it added.

“Our full year 2019 results will demonstrate earnings growth, margin improvement and strong operational cash generation, resulting in a reduction in net debt,” said Wood chief executive Robin Watson.